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The iPod + iPhone Year in Review 2007

By Jeremy Horwitz ● Wednesday, December 19, 2007

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The one major interruption in the iPhone’s six-month hype campaign was Apple’s introduction of Apple TV, an HDTV-dependent media streaming and 40GB storage device with built in wireless capabilities. Touted by Apple as the DVD player of the 21st Century, the $299 Apple TV did away with optical disk storage in favor of playing back music, videos, and photos that were synchronized from a user’s iTunes library, touting its ease of use and clean TV-friendly menus as reasons to prefer it to a video docked iPod or other types of TV-dedicated media players.

By iPod sales standards, the Apple TV was a flop: lacking support for popular video formats, it could only play movies and TV shows that were downloaded from the iTunes Store or transcoded using time-consuming software that Apple was reluctant to provide. The company attempted to reinvigorate interest through a software update and a hardware refresh, adding YouTube video browsing and a $399 160GB model, but consumers didn’t appear to be interested: Apple Store displays of the hardware gathered fewer crowds than curious, confused glances. CEO Steve Jobs quickly re-defined the device as a “hobby” for the company, rather than a pillar of its future growth.

Despite repeated rumors that Apple planned to make changes to improve Apple TV’s appeal, such as adding high-definition iTunes Store video downloads and rentals, releasing a DVR accessory, or reducing its price, nothing actually happened in 2007; even expected software updates have failed to materialize. Instead, the device’s key feature—its clean on-TV user interface—has been absorbed into the Leopard operating system, and Apple Store displays have shrunk to provide more room for popular Apple products. At this point, Apple TV’s biggest moment was the day of its release, and it won’t likely shine like that again until 2008.